HM Revenue & Customs for some reason following the submission of 2017/18 self-assessment tax returns have not been processing the 2018/19 payments on account. HM Revenue & Customs are aware of the problem, however, they have not been able to fix the issue of statements being generated without the 2018/19 payments on account showing.
HM Revenue & Customs have provided an update and the current position is:
- HM Revenue & Customs staff at their contact centres have been given guidance to allow them to create the 2018/19 missing payments on account only if the payment had been made by the taxpayer and is shown on their self-assessment record as at 31 January 2019.
- Where the 2018/19 first payment on account was paid on time by 31 January 2019, it is possible that the payment is sitting on the taxpayer’s self-assessment record as a credit. This is as a result of the 2018/19 payment on account not being processed. A refund of the first payment on account could be issued by HM Revenue & Customs. Where a refund is issued HM Revenue & Customs have confirmed that interest will not be charged if the 2018/19 income tax liability is paid in full by 31 January 2020.
- As a result of the 2018/19 payments on account not being created the income tax liability due for the 2018/19 tax year will be treated as the balancing payment for settlement by 31 January 2020.
- Where the 2018/19 first payment on account has already been paid in full by 31 January 2019, interest will not be charged even if HM Revenue & Customs create the payment on account after the end of January 2019.
- Taxpayers can make payments on account in advance of their statement of account being issued. Otherwise, you may have a higher balancing payment for the 2018/19 tax year to pay by 31 January 2020. Where payments are being made in advance and as they will be shown as a credit on the self-assessment record it will be necessary to contact HM Revenue & Customs to request that a repayment is not made.
- HM Revenue & Customs have confirmed that they are currently working to make sure that when the 2018/19 tax returns are submitted, payments on account for the 2019/20 tax year are processed properly so that the 2019/20 payments on account are shown on an individual’s self-assessment records and payments are allocated correctly.
Even though HM Revenue & Customs have apologised for the error with payments on account not being processed properly, at the time the 2018/19 tax returns are prepared it may come as a surprise to many that they have a larger than expected tax bill to pay by 31 January 2020. This in itself can cause cash flow problems especially so soon into the New Year.
If you think you are going to be impacted by this or you have any concerns, you may wish to speak to your accountant about the problem or if you prepare your own tax returns to contact HM Revenue & Customs.
Author: Anthony Barron, Tax Manager, Plus Accounting
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.